The importance of The Austrian School of Economics may lie in its methodology as much as it does in its theories. Austrian economists have realized that the human systems studied in economic exhibit a level of complexity precludes theoretical understanding from empirical evidence alone. Thus, we must develop and test economic theories based on the use of fundamental principles or axioms and the application of deductive reasoning.
The Austrian Methodology refers to the precise thought processes used in analyzing economic activity. The Austrian School of Economics sets itself apart by not only describing principles and theories but also by opening its methodology. Austrian Economic theories consists of a type of economics, espoused by the Austrian School of Economics, based upon deduction from the nature of human action, especially stressing the subjective nature of value.
I will discuss the characteristics of Austrian economics that make it different from other schools of economics. These eight characteristics markedly distinguish the Austrian School from other popular schools.